BTC sharply plunged again, touching the 94k mark, precisely breaking below the 30-day moving average of 94.8k, triggering an unprecedented large-scale liquidation event, the scale of which even surpassed the liquidation volume during the 2020 '312' incident. In this wave of liquidations, long positions accounted for the vast majority. Overly enthusiastic long leverage is undoubtedly a fatal poison in a bull market. The market has experienced distribution, pinning, and a complete liquidation process.
Whenever the market declines, there are always people eager to find reasons for the drop. Some believe the bull market has ended, while others predict that Ethereum and other altcoins will face significant corrections, requiring months to adjust. The peak of a bull market is often reached after an accelerated sprint, followed by a top consolidation or a double top pattern after a retracement. The entire market was once filled with FOMO sentiment, with new external investors flooding in, and the market view was unanimously bullish without any disagreement. But now, divergences are beginning to intensify, and Ethereum and altcoins remain sluggish. All of this is just the beginning.
In my opinion, where is the bull market that doesn't flash crash?
2017: -33%, -40%, -29%, new highs after retracement.
2020: -20%, -31%, -26%, adjustments did not change the trend of the bull market.
A significant retracement does not equate to a bear market; historical data shows that this is typically just a normal market correction. Today's flash crash is similar to the situation on the 6th, both occurring around 5 or 6 AM, with a clear intention to trigger leverage during the Asian market's rest and not give you a chance to bottom fish. In this bull market, there hasn't been a large-scale background of liquidity injections; the premise for a rise must be that the market burden is light enough, and it is impossible to pull up with excessive leverage. The reason Bitcoin hasn't crashed is that it has no need to clear leverage itself. During these times, the funding rate for altcoins has skyrocketed, and after this flash crash, most funding rates have returned to normal, which is the goal; essentially, it is about clearing leverage.
Currently, both Ethereum and altcoins have not accelerated, with some even lingering at the bottom. If as some people say, altcoins need another significant retracement, is it really to give retail investors an opportunity to bottom fish? This is clearly unreasonable. Overall, today's flash crash is essentially about clearing leverage, and it has had a significant effect; the goal has been achieved.
The daily charts of altcoins are actually quite healthy and won't stay at this position for too long. The purpose of clearing leverage is for the subsequent accelerated market. Each retracement in this phase of the bull market is an opportunity for the Ethereum exchange rate to rise, as well as a chance for Bitcoin's market share to decline further. The bull market is still continuing; action is what matters.
Today's drop in altcoins allows for some replenishing of positions this morning. Since November 5, a daily decline of around 20% seems to have not occurred before. A drop of 20% usually leads to at least a short-term recovery of 6-8%. Recently, the last three weeks have seen declines on Mondays and Tuesdays.
Tomorrow, Wednesday evening's CPI data should boost the market. Weakness to the extreme turns strong. Those shorting should gradually enter at 1-3 resistance points above the market price, and not enter close to pinning positions, as the low point of pinning is a false breakdown that represents support; normal retracements won't easily reach this level. This round of decline can gauge the strength of your altcoin holdings.
Very strong: Retracement 20%, like SUI, ADA
Strong: Retracement 30%, like RAY
Neutral: Retracement 50%, like ALGO
Weak: Retracement 90%, like TRX, CORE, RSR
The extent of retracement directly reflects the market's confidence and resilience in the tokens, which is worth noting.
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